The $377 million tax increase proposed by Louisiana Governor Mike Foster
falls disproportionately on lower-income families and should be scrapped,
says the National Center for Public Policy Research.

In part to balance Louisiana's nearly $14 billion proposed state budget,
now approximately $227 in the red, Governor Foster has proposed a number
of regressive taxes, among them:

a new half-cent sales tax

a 25% increase in liquor taxes

a 25% increase in beer taxes

a 14-cent/pack increase in cigarette taxes

an increase in the telecom tax from 3% to 4%

a new 1% tax on interstate calls

an increase in the gaming tax from 18.5% to 23.5%

According to a June 1996 study by Citizens for Tax Justice and the Institute
on Taxation and Public Policy, the poorest 20% of families nationally pay
an average 16.7% more of their income toward excise taxes on cigarettes,
beer and gasoline than do the richest 1% of families. In Louisiana, that
figure is 15.22%.

"Despite the fact that excise tax increases hurt the poor, they
are the most politically-correct form of tax hike," said Amy Ridenour,
president of The National Center for Public Policy Research. "Politicians
justify tax increases on consumer goods like beer, liquor and tobacco ­
so-called "sin taxes" ­ by saying that the taxes will aid
public health. What they don't say out loud is that they believe that they
know better than the public about what the public's buying decisions should
be. It's yet another manifestation of the nanny state, and it is one that
hurts the poor the most."

In April, an anti-poverty group, the Baton Rouge Catholic Worker, held
a four-day-long vigil at the state capitol in Baton Rouge opposing new taxes
on the poor.

Despite some significant support for the governor's new tax proposal
among leaders in the legislature, an April poll found that Louisiana residents
oppose new taxes by a wide margin: 3-1 in most cases, with new taxes on
business opposed 3-2.

Louisiana residents believe the state's fiscal shortfall is due to "spending
too much" versus "not enough revenue" by a 73-16% margin,
according to the April 6-15 poll by Southern Media and Opinion Research
of Baton Rouge.

Governor Foster is proposing a $13.8 billion state budget fort the 2000-2001
fiscal year. In 1995-96, the last year in office of the previous governor,
Edwin Edwards, Louisiana spent $11.7 billion. This represents an 18% increase,
7 points over inflation. State-generated revenues grew over the period from
$7.5 billion to an expected $9.2 billion for 2000-2001.

The Foster Administration has proposed cutting 5,000 state jobs to help
trim the budget, but has not proposed a reduction in spending sufficient
to make a tax increase unnecessary.

"Cigarette taxes, though possibly the most politically-correct of
the tax increases proposed, are a particularly unstable tax on which to
build a stable long-term state budget," said Ridenour. "Cigarette
sales and tax revenues have declined steadily since the mid-1960s and likely
will continue to do so. State-level tobacco tax increases are an especially
risky long-term revenue source because of the possibility of another substantial
federal cigarette tax increase and the fact that cigarettes are subject
to large price increases as a result of lawsuits against the tobacco industry."

Louisiana cigarette taxes were last increased in 1990, by 20 cents per
pack.

The National Center for Public Policy Research is a conservative/free-market
think-tank established in 1982 and located on Capitol Hill in Washington,
D.C. For more information, contact Amy Ridenour at 202-507-6398 or [email protected] or
visit http://www.nationalcenter.org.

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